Labor Market Concentration

Abstract

A product market is concentrated when a few firms dominate the market. Similarly, a labor market is concentrated when a few firms dominate hiring in the market. Using data from the leading employment website CareerBuilder.com, we calculate labor market concentration for more than 8,000 geographic-occupational labor markets in the United States. Based on the Department of Justice-Federal Trade Commission horizontal merger guidelines, the average market is highly concentrated. Going from the 25th percentile to the 75th percentile in concentration is associated with a 5 percent (OLS) to 17 percent (IV) decline in posted wages, suggesting that concentration increases labor market power.